Investors started February on an optimistic note, bidding stocks higher after logging the worst month for the market in over a year in January.
In the morning's earnings news: Dow component ExxonMobil reported its profit fell 23 percent but still beat Wall Street estimates.
And Medicare provider Humana reported its profit jumped 44 percent, in line with expectations.
On the economic front, personal income and spending rose in December, though it was slightly less than analysts had expected.
Stocks got an extra boost at 10 a.m., as the ISM manufacturing index jumped to 58.4, stronger than expected, in January. Any reading over 50 indicates expansion. Separately, construction spending fell 1.2 percent in December.
One thing traders fixated on in the ISM report: Norbert Ore, chairman of the group, said a reading of around 58 typically correlates to GDP growth of 5.5 percent.
The ISM reading followed strong manufacturing reports from India, China, South Korea and Australia. Economists expect Australia may raise rates tomorrow by a quarter of a percentage point.
The White House expects the budget deficit to soar to $1.56 trillion this year, the highest since World War II, but falling to half that by the time President Obama's term ends in 2012. That includes $1.235 billion for the SEC's budget for policing Wall Street, a 10-percent increase from last year.
One thing hanging over the market's head was alleviated somewhat: A top European Union official said Greece's fiscal cutback plans were ambitious but achievable, relieving some anxiety that drove investors away from risky assets, including stocks, last week.
The Wall Street controversy over bonuses is likely to accelerate, with the Financial Times reporting that Goldman Sachs CEO Lloyd Blankfein could get a bonus of up to $100 million for 2009.
And Morgan Stanley reportedly plans to hire several hundred tradersover the next few years.
Amazon was forced to give in to publisher Macmillanin a dispute involving e-book pricing. Macmillan wants to charge up to $14.99 for e-book versions of best sellers while Amazon wants to hold the line at its current price of $9.99.
Toyota is officially announcing its fix for its widely publicized gas pedal problem this morning, involving a shim that increases the tension on the pedal, thereby making it more difficult for it to stick.
Elsewhere in the auto sector, electric car maker Tesla Motors is expected to launch its $100 million IPO this week.
Techs got a few votes of confidence from analysts: Merriman Curhan started coverage of Palm at "neutral," saying the latest versions of the Pre and Pixi have revitalized the company.
And Oracle got an "outperform" rating and $30 price target from Credit Suisse, which sounded an optimistic note about company spending on business software this year.
But Macy's was downgraded to "hold" from "buy" by Deutsche Bank.
— Reuters contributed to this article.
This Week:
MONDAY: Bank of America/Merrill Lynch trial begins; construction spending; ISM manufacturing index
TUESDAY: Academy Award nominees announced; Madoff liquidation hearing; Volcker, Geithner testify; pending-home sales; auto sales; Earnings from BP, UPS (preannouncement), ADP and News Corp.
WEDNESDAY: Weekly mortgage apps; Challenger and ADP job-cuts reports; ISM services index; weekly crude inventories; Fed's Warsh speaks; Earnings from Pfizer, International Paper, Time Warner, Cisco, Visa and Yum Brands
THURSDAY: Senate hearing on NBC-Comcast; Tea Party Convention; chain-store sales; ECB, BOE announcements; weekly jobless claims; factory orders; Earnings from GlaxoSmithKline, Vodafone, Kellogg, MasterCard, Northrop Grmman, Sony, Unilever and Burger King
FRIDAY: Earnings from Aetna and Tyson Foods
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